Bank checks have been used for centuries to conduct "cashless" transactions, and involve the submission of a signed negotiable instrument in exchange for a product or service of value to the payer. Bank checks, while convenient, do have certain drawbacks since they can be easily forged and fraudulently endorsed by parties other than the intended recipients. As a result, a whole body of rules, regulations and restrictions--including delays in clearing bank checks for multiple days--has developed to deal with the inherent flaws in this system which relies upon an easily defeated form of authentication, a handwritten signature.
In this age of high technology, electronic funds transfers are becoming more and more prevalent and come in many forms. Credit cards are now more widely used. Automatic bill payment is the chosen means for many homeowners to pay the monthly mortgage and utility bills. Debit cards are similar to credit cards. However, the amount of a debit card transaction is taken immediately from a payer's corresponding bank account. A "smart" card is similar to a debit card except that value is stored within a smart card and therefore a user need not have a separate bank account from which funds are taken when a debit transaction occurs. A smart card is essentially a self-contained electronic wallet or purse.
Notwithstanding the advantages of electronic transactions, these methods continue to suffer from several drawbacks. One is authentication. Debit and credit cards continue to rely upon handwritten signatures.
The Internet has increased the public's awareness of the capabilities of the "information highway." This has led to users performing tasks such as buying goods and communication over the Internet. Some believe that the days of "old-fashioned" postal authority delivery of mail will fall by the wayside as email and facsimile transmissions provide instant delivery of communications at comparable cost. The electronic communications and transactions have certain drawbacks since a user must forfeit privacy to companies to carry out electronic communications and transactions. Furthermore, there is no easy way to establish trusted payment in electronic transactions over the Internet because private keys are difficult to secure and there is no trusted location to store such keys and value messages once they are issued.